Earlier this week, during a briefing on the company’s 2016 financial performance, SP Setia president and chief executive officer Datuk Khor Chap Jen said the company would continue to replenish land bank in the Klang Valley and Johor Baru, apart from Australia.

Khor said the company would launch more mid-priced landed properties and affordable homes.

He emphasised that the mid-priced landed properties would consist of terraced units ranging from RM600,000 to RM800,000, adding that demand for property in the Klang Valley was still strong.

At the Eco World’s EGM, also held earlier this week, chief executive officer Datuk Chang Khim Wah said the group had no plans to acquire more landbank and intends to focus on growth areas it has a presence in, namely, Penang, Johor and the Klang Valley.

“If we want to replenish more of our land bank, the price and location have to be right. The land must be situated closer to highways for accessibility,” Chang was quoted as saying.

Eco World has some 8,052.7 acres of land bank with a gross development value (GDV) of RM87.5bil.

Separately, she says Malaysia’s house price index (HPI) is expected to see low single-digit growth in 2017.

“Malaysia’s house price growth has eased but remains positive. It grew 5.4% year-on-year in the third quarter of 2016 compared with a 10-year average of 7.2%.

“The exception is Selangor, where year-on-year growth in the third quarter stood at 7.5% or on par with its 10-year average.”

Lim says the growth was driven by high urbanisation rates.

The Malaysian HPI measures the general trend of domestic residential unit prices.

Increased speculation

In the aftermath of the 2007 to 2009 global financial crisis, the HPI rose drastically by 61% between 2010 and 2015 due to increased speculation and higher land value.

In contrast, between 2004 and 2009, HPI merely increased by 17%. Between 2000 and 2016, the index’s annual change in percentage peaked in 2012 at 11.8%, and has been moving on a downtrend ever since.

PEPS president and CBRE|WTW managing director Foo Gee Jen says the current growth level in residential prices is healthy and sustainable.

“It is healthy to have an annual growth of 5% to 8% as it is more sustainable, unlike in the past five years where we have witnessed double-digit growth.”

Lim says the secondary market has weakened, adding however that many owners are still unwilling to sell below their entry cost.

“As for primary market pricing, developers are trying to maintain their asking prices due to higher replacement costs, by offering incentives and smaller built-ups to increase affordability.”

Finance Ministry valuation and property services director-general Rahah Ismail urges property developers to exclude freebies and rebates in pricing their products as it would lead to higher market prices of the units.

She says this could eventually affect the house buyers’ eligibility for home financing as a larger loan amount would be required.

Healthy growth: Foo says the current growth level in residential prices is healthy and sustainable.

She calls upon the prospective house buyers, especially first-timers, to consider purchasing a unit from the secondary or the auction market.

“In the first nine months of 2016, while only 46.5% of residential units under the primary market were priced below RM300,000, close to 70% of the units in the secondary market were in that range.

“First-time home buyers should consider purchasing a property from the secondary or the auction market to find a suitable and affordable residential unit,” says Rahah.

Lim says she expects overall residential transactions to be similar to pre-2007 levels.

“We’re seeing a bottoming effect. The Malaysian residential absorption rate is at a 14-year low, while the major states are seeing nine to 10-year lows.

“Our population analysis indicates that the incremental population base demand, namely those turning 30 years old or first home buyers, has gone back to pre-2007 levels and transactions are likely to start levelling off.”

On another point, Lim says rental yields within the Klang Valley have been declining for both landed and high-rise residential properties.

“Generally, high-rise tends to command better yields, compared with landed. Currently, most landed residential carry very low yields or may be tough to lease out compared with high-rise units.”